Stock Rally Halted; Crude Oil Surges
Stocks closed modestly lower Monday as oil prices jumped and some investors took profits from last week’s rally.
The Dow industrials slid 92.52 points, or 1.1%, to 8,486.57, after adding 0.5% last week -- the sixth straight weekly gain.
The Nasdaq composite lost 17.45 points, or 1.2%, to 1,393.69, after rising 3.8% last week.
Trading volume was moderate. Losers outnumbered winners by 18 to 14 on the New York Stock Exchange and by 19 to 14 on Nasdaq.
Near-term crude oil futures prices jumped $1.20 to $26.71 a barrel in New York, the biggest one-day gain in seven months, even as United Nations weapons inspectors returned to Iraq for the first time in four years.
Traders said the surge in oil reflected skepticism that Iraq will give the inspectors access to suspected weapons sites. That could fuel renewed threats of war by the Bush administration.
“What we’re seeing is some skittishness from investors in the near term about the prospects of war with Iraq,” said Kevin Caron, market strategist at Ryan, Beck & Co.
Crude oil futures also were pulled higher by rallies in heating oil, which is refined from crude, and natural gas, a competing heating fuel, Bloomberg News reported. Heating-fuel prices rose as cold weather in northern parts of the U.S. boosted demand.
On Wall Street, investors chipped away at some retail stocks after Wal-Mart Stores predicted that November sales at stores open at least a year will be at the low end of its forecast for a gain of 2% to 4%. Wal-Mart lost $1.81 to $53.68. The stock has mostly traded between $53 and $56 since Oct. 28.
On the plus side, Toys R Us surged $2.25 to $12.65 after the toy retailer reported a smaller-than-expected loss in the quarter ended Nov. 2, and sounded optimistic about the holiday selling season.
The stock market got a boost late last week on reports of stronger-than-expected October retail sales and a rise in consumer sentiment in November.
“I think what the market feared as far as retail sales going into the holiday is not going to happen,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “People are still going to be out there spending money.”
As stocks rose last week, Treasury bond yields resurged. The 10-year T-note yield ended Friday at 4.03%, up from 3.86% a week earlier. On Monday bond yields eased slightly, with the 10-year T-note falling to 4%.
Among Monday’s highlights:
* In the retail sector, Federated Department Stores lost $1.15 to $31.71, Target slid $1.45 to $31.38 and Ross Stores slipped $1.28 to $43.67, but Best Buy rose $1.56 to $22.31 and Home Depot added 28 cents to $28.60.
Home Depot rival Lowe’s slid $1.80 to $40.70 despite reporting third-quarter earnings that beat analysts’ expectations.
* Among toy makers, Mattel gained 16 cents to $19.56 and Leapfrog Enterprises added 15 cents to $32, a new high for the year.
* Citigroup fell $1.08 to $35.82 on continued worries about allegations that Chairman Sanford Weill may have sought to influence Jack Grubman, a former Citigroup stock analyst, in Grubman’s rating of AT&T; shares in 1999. Weill has denied wrongdoing.
Other bank stocks also were weak. Bank of America fell $1.38 to $67.41 and Bank One lost 72 cents to $37.56.
* AT&T; dropped 35 cents to $13.51 after Lehman Bros. cut the firm’s stock rating to “underweight” from “equal weight.”
* UAL led airline shares higher, soaring 55 cents to $3.50, after the parent of United Airlines said it expected to cut 9,000 more jobs as part of a restructuring to return to profitability.
Among Southland issues, SCPIE Holdings jumped $1.04 to $7.02. The medical malpractice insurance firm told the New York Stock Exchange it had nothing new to report. The company held a conference call with investors on Nov. 12 to discuss plans to divest certain operations.
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Market Roundup, C8-9
